Homes Without People And People Without Homes

A weekend topic starting with Market Watch. “With major data providers reporting that mortgage delinquencies continue to decline, Wall Street and the pundits are more convinced than ever that the mortgage crisis is dead and buried. The enormous delinquency problem in the New York City metro area shows why I’m convinced that the U.S. housing and mortgage crisis is far from over, and reveals an ugly truth about mortgage deadbeats. Moreover, New York City is not the only city in this weakened position.”

“Since February 2010, mortgage servicers have sent out a total of 1,242,490 pre-foreclosure notices to delinquent owner-occupants in New York City and Long Island. This does not include delinquent investor-owners because that was not required under the 2009 law. About 85% of these notices were for delinquent first liens and the remainder were for second liens.”

“From the data and my contact, it’s likely that roughly 40% of these were second or third notices sent to the same property. Why? The servicers have been sending repeat notices to owners who have not taken action to cure their delinquency for more than a year, and have not yet been foreclosed. My contact recently informed me that close to 20% of the total are duplicates sent out mistakenly by the servicers.”

“That most of these delinquent owners have not paid for years is confirmed by related figures published monthly in the Long Island Real Estate Report. Since early 2016, almost half of the formal notices of default filed in Suffolk County have been repeat notices. Why? In New York State, a default notice (known as a lis pendens) is only active for three years after which it expires. Hence lenders have had to file a new default notice for borrowers whose default notice has been active for three years.”

“The Suffolk County statistics reveal how outrageous the serious delinquency situation has become in the New York metro area. Although 359,362 cumulative pre-foreclosure notices have been sent to deadbeat borrowers in Suffolk County alone, fewer than 1,000 formal default notices have been filed each month on these properties since mid-2008.”

“My article in February 2017 with figures from Fitch Ratings showing that 53% of all delinquent non-agency (i.e., not guaranteed by Fannie Mae or Freddie Mac) securitized loans in the state of New York had not made a payment for more than five years as of August 2016. The New York City metro alone had roughly 225,000 of these loans outstanding. In February 2016, 37% of them were seriously delinquent. That is the worst delinquency rate for any major metro in the nation. The notion that many owners in the New York City metro have cured their delinquency is ludicrous.”

“Unfortunately, to a great extent we are in the dark when it comes to the two dozen other major metros where the housing collapse of a decade ago was centered. It is evident that in early 2016, 10 major metros that had deadbeat problems with their non-agency securitized loans all had serious delinquency rates of 23% or higher. I am confident that the delinquency rate for those major metros that suffered significant housing collapses is almost certainly much higher than widely believed.”

The Observer Dispatch in New York. “While some vacant houses may look like the living dead, they don’t necessarily fall under New York state’s definition of a zombie. Funding awarded in 2016 allowed the city of Utica to hire Rust2Green Utica, which has enlisted several agencies into a coalition called Housing Action Committee. The state also has bankrolled one of the committee’s participants: the Greater Mohawk Valley Land Bank, a nonprofit that acquires and stabilizes tax-delinquent, tax-foreclosed vacant and abandoned properties throughout Utica, Rome and four different counties.”

“These partnerships have been a palpable product of Utica’s Zombie Property Initiative. Some, however, feel there is not much else to show for it. With Utica’s properties, Rust2Green has worked with the city attorneys to send letters to the mortgage holders to start a dialogue, said Rust2Green Strategic Initiatives Coordinator Derek Crossman.”

“‘I think the mortgage crisis of 2008 was a major player,’ Crossman said when asked what led to these issues. ‘It affected a lot of people. All of those predatory loans that came to fruition after 2008 through 2010, you see those foreclosures and people just — what could they do? They abandoned their homes and the banks foreclosed on them. Unfortunately, it took until 2016 to get a law in place to try and help cities try and get a handle on this.'”

“As of November, Rust2Green had yet to hear from any lending institutions in response to the letters about the zombie properties. City officials see legal action as a last resort. They also are contending with the limited scope of the property law that exempts banks with smaller portfolio sizes or dilapidated houses if they are not technically zombies.”

The Herdon Gazette on Michigan. ” Traditionally ignored by the city and often tolerated by neighbors, squatters occupy more than 3,000 homes in Detroit, according to the Detroit Land Bank Authority, a public agency that manages the city’s abandoned properties.”

“Detroit has a tangle of different conditions that make squatting a possibility, said sociologist Claire Herbert: The city has more than 43,000 vacant homes, according to research group Data Driven Detroit, and ― plus there’s a lack of city resources for both property regulation and housing assistance.”

“The city’s vacancy and rampant speculation invert the normal assumption that ownership is the pinnacle of neighborhood care. In the absence of city enforcement, Detroiters use their own gauge to informally regulate illegal property use ― what Herbert calls an ‘ethos of care’ ― so if squatters contribute to the community, neighbors are more likely to welcome them.”

“‘There’s something really messed up happening in the city right now,’ said Michele Oberholtzer, with the United Community Housing Coalition. ‘We have homes without people and people without homes. It does not make sense, and we have to find a way to put the two together.'”

From WEWS on Ohio. “Nadine and Robert Proe said facing a 2009 bankruptcy wasn’t easy, but now they are still left with an unexpected $15,000 demolition bill from the City of Cleveland. Robert Proe showed WEWS the documents proving he signed over his Cleveland home to EMC Mortgage when he filed for Chapter 7 bankruptcy, and said he heard almost nothing about his former home until it was demolished in 2016.”

“He said he was never given any notice that the bank decided to vacate the foreclosure, and never took his name off of the property. ‘If they would have told me in the beginning that I was still responsible for this house, it would have still been beautiful, someone could have bought it,’ he said. ‘I thought I no longer owned the home, I was told I couldn’t go on the property, while the bank ran it into the ground.'”

“WEWS attempted to reach EMC Mortgage about this case but all three company phone numbers had been disconnected.”

And if you move to a red state – don’t bring your progressive values with you.

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“From WEWS on Ohio. “Nadine and Robert Proe said facing a 2009 bankruptcy wasn’t easy, but now they are still left with an unexpected $15,000 demolition bill from the City of Cleveland. Robert Proe showed WEWS the documents proving he signed over his Cleveland home to EMC Mortgage when he filed for Chapter 7 bankruptcy, and said he heard almost nothing about his former home until it was demolished in 2016.”

Mississippi received $2.13 for every tax dollar the state sent to Washington in 2015, according to the Rockefeller study. West Virginia received $2.07, Kentucky got $1.90 and South Carolina got $1.71.

Meanwhile, New Jersey received 74 cents in federal spending for tax every dollar the state sent to Washington. New York received 81 cents, Connecticut received 82 cents and Massachusetts received 83 cents.

The other half is to put the mortgage money you would have sent to the bank into savings (at another bank). And build up a massive cash pile to buy the next house for all cash.

What is the average mortgage payment of a NYC loan? $3000? After five years – that is a cool $180,000 cash assuming a 0.00% rate.

But i will beat a steak dinner that all those delinquent folks have been paying their property taxes! Why? The city doesn’t play that game. A public union goon with come and kick you out of your home within months of missing the payment of the property taxes.

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“My article in February 2017 with figures from Fitch Ratings showing that 53% of all delinquent non-agency (i.e., not guaranteed by Fannie Mae or Freddie Mac) securitized loans in the state of New York had not made a payment for more than five years as of August 2016. The New York City metro alone had roughly 225,000 of these loans outstanding.

How it used to work in the bad old days of men only peeing in men’s bathrooms:

Normal interest rates, bank ate their bad loans, banks were very careful to lend money, banks were prosecuted for fraud, 20% down, respect for private property, you had to prove you had a job, etc.

Housing was pretty affordable, people had skin in the game and there was something at every income level.

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“‘There’s something really messed up happening in the city right now,’ said Michele Oberholtzer, with the United Community Housing Coalition. ‘We have homes without people and people without homes. It does not make sense, and we have to find a way to put the two together.’”

‘We have homes without people and people without homes. It does not make sense, and we have to find a way to put the two together.’”

Needless to say, whatever “solution” Ms. Oberholtzer comes up with will involve taxpayer subsidies and guarantees, and plentiful opportunities for generating patronage and graft to be funneled into the coffers and pockets of the local political apparatchiks.

There seems to be a common denominator among all these urban dystopias where deadbeats shirk their financial obligations en masse with few consequences and corrupt municipal authorities “partner” with “non-profits” to supposedly tackle housing-related problems, but I just can’t put my finger on it.

The number of people “sleeping rough” has doubled in the UK since 2010. I’ve scoured the MSM and can find no mention of what could’ve precipitated such a speculative run-up in the cost of housing and commercial rents that shuttered so many small retail establishments and made housing unaffordable for those on the margins of society. Whatever it was, it seems like it started right around 2009 and fed a speculative mania for at least the next eight years. Maybe those hard-boiled MSM investigative reporters will figure it out for us some day.

OT… I thought the Maldive Islands were supposed to be underwater already? You know, sea level rise due to human-caused global warming? But new resorts are being opened, following are just two examples.

I’m sure these all cost quite a few $$$ to build. Oh, and they all need to be insured too. Maybe the developers and insurance companies (and re-insurers) don’t expect these to drown anytime soon…

Waldorf Astoria Maldives Ithaafushi–Opening: March 2019.
“Spanning three islands in the South Male Atoll, the resort will have 10 dining outlets and 138 carefully positioned beachfront and overwater villas. Each lavishly appointed villa will be equipped with a private pool, hot tub, and lounge deck area. Some overwater villas will also have magnificent glass flooring for crystal-clear views of the lagoon below.” It will also feature a “massive, it-has-everything 21,500-square-foot spa…”